In the midst of a Virginia divorce, many a military man can lose sight of a valuable asset that plays a key role in that divorce: your military retirement. Today’s Coast Guardsman, for example, can choose from the High-3 retirement plan or the Redux/Career Status Bonus (CSB) plan. Add to the mix the new Blended Retirement System (BRS) and you have a lot of options. All of these are valuable assets to consider during your military divorce.
Cost of Living Adjustment (COLA)
Before we delve deeper into the various choices, you should know all retirement plans are protected by COLA, an annual cost-of-living adjustment keyed to the Consumer Price Index (CPI). This is why you never hear retired military members complaining about living on a fixed income. Their income is not fixed; it grows to keep up with the cost of continuing to stride the planet.
A note of caution: CSB/REDUX uses CPI – 1 percent for its COLA.
High-3 / High-36
The Department of Defense’s (DoD) military compensation site carries a lot of information about retirement, including the High-3 or High-36 (depending on whether you like measuring by years or months).
Your retirement calculations begin by establishing your retired pay base, which under High-36 is the average of the highest 36 months of basic pay. Since most military men earn their largest paychecks in the last three years of service, this is why it is also known as High-3. Anyone entering the service (Date of Initial Entry to Military Service, DIEMS) after September 8, 1980 will use the High-3 or High-36 method of calculating retired pay base. One additional wrinkle: you also have to have DIEMS before August 1, 1986 (or after and you did not choose CSB/REDUX).
The Ol’ Multiplier
Once you establish your retired pay base, you have a multiplier worth 2.5 percent for each year of service. Say you are in the Coast Guard (or any branch; we’re just using CG as an example) for 20 years. You multiply 2.5 percent times 20 and get 50 percent. Stick around for 25 years and your multiplier leaps to 62.5 percent. Suck it up, Coastie, and stay on watch for 40 years — you get a 100 percent multiplier.
What do you do with the multiplier? Take your retired pay base and multiply it to get your gross retired play. An example, please, Ensign!
$45,824 — High-3
x 50 percent (multiplier for 20 years of service)
$22,912 gross retired pay (annually)
That’s a monthly gross retirement income of $1,909, which is certainly not enough for most Virginia men to live on, but makes a nice cushion while you pursue a civilian career.
Depending on your DIEMS and perspective, CSB/REDUX may be a slightly less rewarding plan than High-3. If you entered the service on or after August 1, 1986 and also elected to receive the Career Status Bonus (CSB), you will retire under this method.
You calculate your retired base pay the same as with High-3, but for each year of service less than 30 years, you deduct one percentage point. Chief Petty Officer, an example!
$62,010 — CSB/REDUX
x 40 percent (reduced by 1 percentage point every year for 10 years)
$24,804 gross retired pay (annually)
Career Service Bonus (CSB)
Your Career Service Bonus is tied in with REDUX, so after 15 years of service, you receive $30,000 as a bonus and agree to serve at least five more years.
Blended Retirement System (BRS)
The new Blended Retirement System (BRS) is for new members of the services. If you entered before December 31, 2017, you are already protected with either High-3 or CSB/REDUX. For new service members, BRS keeps some of the traditional components of High-3 or CSB/REDUX but also mimics the private-sector 401(k) retirement plans, providing either defined benefit or defined contribution paths to retirement.
Leave Your Military Divorce to the Professionals
Relating all this to divorce (yeah, yeah, everything comes back around to divorce in this place), the asset you agree to equitably divide today may appreciate substantially in value 15 or 20 years down the road, when you are ready to draw retirement pay. So do not quibble with your lawyer when your lawyer quibbles with your soon-to-be ex-wife’s attorney about a percentage point or two in your favor.
She is entitled to an equitable portion of your military retirement income (based on the non-tangible benefits she provided to you to allow you to serve in the military), but recognize the actual value of that retirement asset before agreeing to anything. Military divorce can get complicated, so the experience of a Virginia family law attorney could be a wise investment.
Whether you are a military man thinking of retirement or are already retired, a call to 757-383-9184 puts you in touch with The Firm For Men. We can help you by telephone, or you can contact us online, to find out everything you need to know to protect your military retirement income. We work every day to preserve and defend the rights of Virginia’s men.